As South Africa’s largest development finance institution, the Industrial Development Corporation (IDC) showcases how funding can unlock opportunities while also revealing persistent hurdles in water and sanitation investment.

“Established in 1940, the IDC has operated sustainably for 85 years The only cash injection we have ever received from the government was at inception,” states Thabo Kabini, senior water specialist at the IDC.

The institution operates across sectors like mining, manufacturing, agriculture, energy and infrastructure. Kabini stresses that water is a common thread across all of them.

“Water cuts across every SBU. Whether you are in mining, agro-processing, or even film production, without water you cannot function. We invest in bulk infrastructure such as dams, tunnels, pump stations and reservoirs, as well as alternative water sources like desalination, wastewater reuse and rainwater harvesting.”

He highlights the IDC’s involvement in major national projects, including the Lesotho Highlands Water Project and the Mokolo Crocodile project. The organisation also supports wastewater treatment, rehabilitation of ageing infrastructure, and industrial water efficiency initiatives.

Finance challenges

Many projects fail to secure funding because they are not bankable.

The IDC has identified three recurring issues:

1. Project preparation: Many municipal and water board proposals lack feasibility studies, designs or a coherent business case.
2. Governance and corruption: Due diligence and media checks frequently expose governance failures that undermine confidence.
3. Tariffs: Water tariffs in many municipalities are not cost-reflective, making projects financially unsustainable. The collapse of Sedibeng Water and other boards was partly attributed to this problem.

Closing the gap

To address these gaps, the IDC funds project preparation, covering pre-feasibility, feasibility and design studies. “We can finance up to 49% of project development costs, but we closely monitor how that money is spent.”

The IDC also provides a wide range of funding instruments, from senior and junior debt to equity in strategic projects, guarantees and working capital. “In the private sector, many contractors only realise they need funding after receiving appointment letters. We step in with instruments like working capital and guarantees to ensure projects continue,” Kabini explains.
Developmental impact remains the guiding criterion for IDC’s funding decisions.

“Job creation, local content, regional development, transformation and support for black industrialists are critical. We even adjust the cost of funding to reward ownership by women and youth,” Kabini says.

For Kabini, the IDC’s role extends beyond financing. “We don’t just fund projects and walk away. We hold the client’s hand through implementation and beyond, sharing lessons from past projects to help them succeed,” he notes.

Reflecting on IDC’s long track record, Kabini recalls success stories such as Ouma Rusks, which the IDC supported decades ago, and which still thrives today. “These examples show the lasting impact of IDC’s work. We are constantly seeking new sectors and new ways of doing things, because our responsibility is to drive the economy forward,” he concludes.